Return for Nuclear Decommissioning Funds and Certain Related Persons

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Instructions for Form 1120-ND

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Instructions for
Form 1120-ND

Department of the Treasury
Internal Revenue Service

(Rev. February 2007)
Return for Nuclear Decommissioning Funds and Certain Related Persons
Section references are to the Internal
Revenue Code unless otherwise noted.

What’s New

• For tax years beginning in 2006 only, a

nuclear decommissioning fund can request
a credit or refund of the federal telephone
excise tax paid on long distance or bundled
services that were billed after February 28,
2003, and before August 1, 2006. See the
instructions for line 14.
• For tax years beginning after 2005, the
following apply to nuclear decommissioning
funds. For more information, see section
468A as amended by the Energy Tax
Incentives Act of 2005.
1. There is no longer a cost of service
requirement for deductible contributions,
and all taxpayers are allowed deductions for
amounts contributed to a qualified fund.
2. Taxpayers can accumulate up to
100% of the present value of the nuclear
power plant’s decommissioning costs in a
qualified plan.
3. Taxpayers can apply for a new ruling
amount if, in any tax a year, the nuclear

power plant is granted a license renewal,
extending its useful life.

General Instructions
Purpose of Form
Nuclear decommissioning funds use Form
1120-ND, Return for Nuclear
Decommissioning Funds and Certain
Related Persons, to report contributions
received, income earned, the administrative
expenses of operating the fund, and the tax
on modified gross income. The return is also
used to report the section 4951 initial taxes
on self-dealing.

Who Must File
All section 468A nuclear decommissioning
funds must file Form 1120-ND. A
disqualified person engaging in self-dealing
must file Form 1120-ND to report the initial
tax. See Part II, Initial Taxes on Self-Dealing
(Section 4951), on page 3 to determine if an
individual has engaged in self-dealing as a
trustee or disqualified person.

Where To File
File the fund’s or disqualified person’s or trustee’s return at the applicable IRS address
listed below.
If the fund’s principal
business, office, or agency
is located in:
Connecticut, Delaware,
District of Columbia, Illinois,
Indiana, Kentucky, Maine,
Maryland, Massachusetts,
Michigan, New Hampshire,
New Jersey, New York, North
Carolina, Ohio, Pennsylvania,
Rhode Island, South Carolina,
Vermont, Virginia, West
Virginia, Wisconsin
Alabama, Alaska, Arizona,
Arkansas, California,
Colorado, Florida, Georgia,
Hawaii, Idaho, Iowa, Kansas,
Louisiana, Minnesota,
Mississippi, Missouri,
Montana, Nebraska, Nevada,
New Mexico, North Dakota,
Oklahoma, Oregon, South
Dakota, Tennessee, Texas,
Utah, Washington, Wyoming

And the total assets at the
end of the tax year (Form
1120-ND, Schedule L, line 6,
column (b)) are:

Use the following Internal
Revenue Service Center
address:

Note. Each person liable for filing a return
to pay any tax reportable on this form must
file a separate return.

When To File
Generally, a fund must file its income tax
return by the 15th day of the 3rd month after
the end of its tax year. The return of a
trustee or self-dealer who owes tax under
section 4951 must be filed by the 15th day
of the 3rd month after the end of the tax
year of the trustee or self-dealer.
If the due date falls on a Saturday,
Sunday, or legal holiday, the fund may file
on the next business day.
Private delivery services. Funds can use
certain private delivery services designated
by the IRS to meet the timely mailing as
“timely filing/paying” rule for tax returns and
payments. See the Instructions for Form
1120, U.S. Corporation Income Tax Return,
for details.
Private delivery services cannot
deliver items to P.O. boxes. The fund
CAUTION must use the U.S. Postal Service to
mail any item to an IRS P.O. box address.

!

Extension of time to file. File Form 7004,
Application for Automatic 6-Month Extension
of Time To File Certain Business Income
Tax, Information, and Other Returns, to
request a 6-Month extension of time to file.
Generally, file Form 7004 by the regular due
date of the return.
A disqualified person or trustee filing to
report section 4951 taxes must also file
Form 7004 to request an extension of time
to file.

Who Must Sign
Less than $10 million

Cincinnati, OH 45999-0012

$10 million or more

Ogden, UT 84201-0012

Any amount

Ogden, UT 84201-0012

The return must be signed and dated by an
authorized trustee. The return of any person
who engaged in any act of self-dealing must
be signed and dated by that person or the
individual authorized to sign on behalf of
that person.
If an employee of the fund completes
Form 1120-ND, the paid preparer’s space
should remain blank. Anyone who prepares
Form 1120-ND but does not charge the fund
should not complete that section. Generally,
anyone who is paid to prepare the return
must sign it and fill in the “Paid Preparer’s
Use Only” area.
The paid preparer must complete the
required preparer information and:
• Sign the return in the space provided for
the preparer’s signature.
• Give a copy of the return to the taxpayer.

Cat. No. 11508V

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Paid Preparer Authorization

Estimated Tax Payments

Recordkeeping

If the fund wants to allow the IRS to discuss
its tax return with the paid preparer who
signed it, check the “Yes” box in the
signature area of the return. This
authorization applies only to the individual
whose signature appears in the “Paid
Preparer’s Use Only” section of the fund’s
return. It does not apply to the firm, if any,
shown in that section.

Generally, the following rules apply to the
fund’s payments of estimated tax.
• The fund must make installment
payments of estimated tax if it expects its
total tax for the year (less applicable credits)
to be $500 or more.
• The installments are due by the 15th day
of the 4th, 6th, 9th, and 12th months of the
tax year. If any date falls on a Saturday,
Sunday, or legal holiday, the installment is
due on the next regular business day.
• Figure the fund’s expected modified gross
income for the tax year. Then multiply the
fund’s expected modified gross income by
20% and use Form 1120-W, Estimated Tax
for Corporations, as a worksheet to compute
estimated tax.
• If the fund does not use EFTPS, use the
deposit coupons (Forms 8109) to make
deposits of estimated tax.
• If the fund overpaid estimated tax, it may
be able to get a quick refund by filing Form
4466, Corporation Application for Quick
Refund of Overpayment of Estimated Tax.

Keep the fund’s records for as long as they
may be needed for the administration of any
provision of the Internal Revenue Code.
Usually, records that support an item of
income, deduction, or credit on the return
must be kept for 3 years from the date the
return is due or filed, whichever is later.
Keep records that verify the fund’s basis in
property for as long as they are needed to
figure the basis of the original or
replacement property.
The fund should keep copies of all filed
returns. They help in preparing future and
amended returns.

The authorization will automatically end
no later that the due date (excluding
extensions) for filing the fund’s tax return. If
the fund wants to expand the paid
preparer’s authorization or revoke
authorization before it ends, see Pub. 947,
Practice Before the IRS and Power of
Attorney.

Assembling the Return
To ensure that the fund’s tax return is
correctly processed, attach all schedules
after page 2, Form 1120-ND, in alphabetical
order followed by other forms in numerical
order.
Complete every applicable entry space
on Form 1120-ND. Do not write “See
Attached” instead of completing the entry
spaces. If more space is needed on the
forms or schedules, attach separate sheets
using the same size and format as the
printed forms. If there are supporting
statements and attachments, arrange them
in the same order as the schedules or forms
they support and attach them last. Show the
totals on the printed forms. Also, be sure to
enter the fund’s name and employer
identification number (EIN) on each
supporting statement or attachment.

Depository Method of Tax
Payment
Generally, the following apply to deposits of
tax payments.

• The fund must pay the tax due in full no

later than the 15th day of the 3rd month
after the end of the tax year.
• The fund must make electronic deposits
of all depository taxes (such as employment
tax, excise tax, and fund income tax) after
December 31 of the calendar year following
any calendar year in which the fund
deposited more than $200,000 of such
taxes. Once the fund is required to use the
Electronic Federal Tax Payment System
(EFTPS), it must continue to use EFTPS in
all later years.
• If the fund is required to use EFTPS and
fails to do so, it may be subject to a 10%
penalty. If the fund is not required to use
EFTPS, it may participate voluntarily. To
enroll in or get more information about
EFTPS, call 1-800-555-4477. To enroll
online, visit www.eftps.gov.
If the fund does not use EFTPS, deposit
fund income tax payments (and estimated
tax payments) with Form 8109, Federal Tax
Deposit Coupon. If the fund does not have a
preprinted Form 8109, use Form 8109-B to
make deposits. Get this form by calling
1-800-829-4933 or visiting an IRS taxpayer
assistance center. Have the fund’s EIN
ready when calling or visiting. For more
information, see the instructions for Form
8109.

For more information on estimated tax
payments, see the instructions for line 15.

Interest and Penalties
Interest. Interest is charged on taxes paid
late even if an extension of time to file is
granted. Interest is also charged on
penalties imposed for failure to file,
negligence, fraud, substantial valuation
misstatements, substantial understatements
of tax, and reportable transaction
understatements from the due date
(including extensions) to the date of
payment. The interest charge is figured at a
rate determined under section 6621.
Penalties. A fund that does not file its tax
return by the due date, including extensions,
may be penalized 5% of the unpaid tax for
each month or part of a month the return is
late, up to a maximum of 25% of the unpaid
tax. A fund that does not pay the tax when
due generally may be penalized 1/2 of 1% of
the unpaid tax for each month or part of a
month the tax is not paid, up to a maximum
of 25% of the unpaid tax. These penalties
will not be imposed if the fund can show that
the failure to pay was due to reasonable
cause.
Other penalties can be imposed for
negligence, substantial understatement of
tax, reportable transaction understatements,
and fraud. See sections 6662, 6662A, and
6663.

Accounting Method
The fund must use the same method of
accounting as the electing taxpayer.

Rounding Off to Whole Dollars
The fund may round off cents to whole
dollars on its return and schedules. If the
fund does round to whole dollars, it must
round all amounts. To round, drop amounts
under 50 cents and increase amounts from
50 to 99 cents to the next dollar (for
example, $1.39 becomes $1 and $2.50
becomes $3).
If two or more amounts must be added to
figure the amount to enter on a line, include
cents when adding the amounts and round
off only the total.

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Additional Information
See the instructions for Form 1120 and Pub.
542, Corporations, for more information
about corporations, including additional
forms the fund may need to file and how to
get forms and publications.

Specific Instructions
Period Covered
Enter the tax year in the space provided at
the top of the form. For a calendar year,
enter the last two digits of the calendar year
in the first entry space. For a fiscal tax year
return, fill in the tax year space at the top of
the form.

Name and Address
The fund name must be entered on every
Form 1120-ND. If this return is filed to report
the income, deductions, and income tax
liability of the fund, enter the name and
address of the fund in the address section.
If the return is filed by a trustee or
disqualified person to report section 4951
taxes, enter that person’s name and
address in the address section.
Include the suite, room, or other unit
number after the street address. If the Post
Office does not deliver mail to the street
address and the fund, trustee, or disqualified
person has a P.O. box, show the box
number instead.

Item A. Employer Identification
Number (EIN)
Enter the fund’s EIN. If the fund does not
have an EIN, it must apply for one. An EIN
may be applied for online, by telephone, by
fax, or by mail depending on how soon the
fund needs to use the EIN. Use Form SS-4,
Application for Employer Identification
Number.
If the fund has not received its EIN by the
time the return is due, write “Applied for” and
the date the fund applied in the space for
the EIN. For more details, see the
Instructions for Form SS-4.

Item B. Identifying Number of
Trustee or Disqualified Person
If the return is filed by a trustee or
disqualified person to report section 4951
taxes, enter the identifying number of the
trustee or disqualified person. For an
individual trustee or disqualified person,
enter the individual’s social security number.
If the trustee or disqualified person is not an
individual, enter the EIN.

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Note. Do not complete item B if Form
1120-ND is filed to report the income,
deductions, and income tax liability of the
fund.

Item C. Fund, Trustee, or
Disqualified Person
Check only the box that applies.
1. When filed to report the income,
deductions, and income tax liability of the
fund, check the “Fund” box.
2. When filed by a trustee who is liable
for taxes under section 4951, check the
“Trustee” box.
3. When filed by a disqualified person
who is liable for section 4951 tax, check the
“Disqualified person” box.

Item D. Final Return, Name
Change, Address Change, or
Amended Return
Indicate a final return, name change,
address change, or amended return by
checking the appropriate box. If you are a
trustee or disqualified person reporting
section 4951 taxes, omit item D.
Note. If a change in address occurs after
the return is filed, use Form 8822, Change
of Address, to notify the IRS of the new
address.

Part I. Computation of Fund
Income Tax
Income
Line 1. Taxable interest. Enter the total
taxable interest income received or accrued
for the year, including any original issue
discount. Do not include tax-exempt interest
on line 1; but report it as an item of
information on Schedule M, line 2d.
Line 2. Capital gain net income. Every
sale, exchange, or actual or deemed
distribution of assets held by the fund must
be reported in detail on Schedule D (Form
1120), Capital Gains and Losses, even if
there is no gain or loss. The amount realized
on an actual or deemed distribution is the
fair market value of the assets as of the date
of distribution.
Line 3. Other income. Enter any other
taxable income not reported on line 1 or line
2 and explain its nature on an attached
schedule. If the fund had only one item of
other income, describe it in parentheses on
line 3.

Deductions
Note. A deduction is not allowed for certain
expenses allocable to tax-exempt income.
See section 265. In addition, a deduction is
not allowed for distributions made to electing
taxpayers. Report such payments as an
item of information on Schedule M, line 2c.
Liabilities are not treated as incurred prior to
the time economic performance takes place.
See section 461(h).
Line 5. Trustee fees. Enter the total
deductible fees paid or incurred to the
trustee(s) for administering the fund during
the tax year.
Line 6. Taxes. Enter deductible taxes paid
or incurred during the tax year, including
state and local income taxes. Do not deduct

federal income taxes or taxes not imposed
on the fund.
Line 8. Other deductions. Attach a
schedule listing by type and amount all
allowable deductions that are not deducted
elsewhere on Form 1120-ND. Include
investment advisory fees, actuarial
expenses, and other administrative
expenses paid or incurred during the tax
year, but do not include decommissioning
costs.
Line 11. Net operating loss deduction.
Enter the amount of any net operating loss
deduction allowed by Regulations section
1.468A-4(b)(4), and explain its computation
on an attached schedule.
Line 14. Payments. Generally, no
payments are allowed other than those on
lines 14a through 14d and the credit for
backup withholding. However, for 2006, the
following apply.
Credit for federal telephone excise tax
paid. If the fund was billed after February
28, 2003, and before August 1, 2006, for the
federal telephone excise tax on long
distance or bundled service, the fund may
be able to request a credit for the tax paid.
The fund had bundled service if its local and
long distance service was provided under a
plan that does not separately state the
charge for local service. The fund cannot
request the credit if it has already received a
credit or refund from its service provider. If
the fund requests the credit, it cannot ask its
service provider for a credit or refund and
must withdraw any request previously
submitted to its provider.
The fund can request the credit by
attaching Form 8913, Credit for Federal
Telephone Excise Tax Paid, showing the
actual amount the fund paid. Include the
amount from line 16 of Form 8913 in the
total for line 14f of Form1120-ND. Enter
“TETR” in the space next to line 14f. Attach
Form 8913 to the fund’s 2006 Form
1120-ND or the fund’s return for the tax year
that includes December 31, 2006.
The fund also may be able to request the
credit based on an estimate of the amount
paid. See Form 8913 for details. In either
case, the fund must keep records to
substantiate the amount of the credit
requested.
Backup withholding. If the fund had
federal income tax withheld from any
payments it received because, for example,
it failed to give the payer its correct EIN,
include the amount withheld in the total for
line 14f. Write the amount withheld and the
words “Backup Withholding” in the blank
space above line 14f.
Line 15. Estimated tax penalty. A fund
that does not make estimated tax payments
when due may be subject to an
underpayment penalty for the period of
underpayment. Use Form 2220,
Underpayment of Estimated Tax by
Corporations, to see if the fund owes a
penalty and to figure the amount of the
penalty. If Form 2220 is attached, check the
box on line 15 and enter the amount of the
penalty on that line.

Schedule L. Balance Sheets
The balance sheets should agree with the
fund’s books and records.

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Schedule M. Other Information
Line 1. The term “electing taxpayer” means
an eligible taxpayer that elects the
application of section 468A to deduct
payments made to a nuclear
decommissioning fund. See Regulations
section 1.468A-7 for the rules concerning
the election.
Line 5. If you are a trustee or disqualified
person (defined below) complete the items
included in line 5 to determine if you have
engaged in an act of self-dealing.

Part II. Initial Taxes on
Self-Dealing (Section 4951)
Initial taxes on self-dealers
An initial tax of 10% of the amount involved
(defined later) is imposed on each act of
self-dealing between a disqualified person
and a nuclear decommissioning fund for
each tax year (or part of a tax year) in the
taxable period. The tax is required to be
paid by any disqualified person (other than a
trustee acting only as a trustee of the trust)
who participates in the act of self-dealing.

Initial taxes on trustee
A tax of 21/2% of the amount involved is
imposed on a trustee who participates in the
act of self-dealing. The tax is not imposed if
the trustee unwillingly or due to reasonable
cause participated in the act. The tax is
computed on all acts of self-dealing that
occur within the taxable period. The tax is
required to be paid by the trustee who
participates in the act.
Exceptions. The initial tax on the act of
self-dealing of a disqualified person or a
trustee is not imposed if the acts of
self-dealing are corrected within the taxable
period.

Definitions
Self-dealing. When determining if an act is
an act of self-dealing, treat the transfer of
personal property by a disqualified person to
the fund as a sale or exchange if the
property is subject to a mortgage or similar
lien. Otherwise, the term “self-dealing”
means any direct or indirect:
• Sale, exchange, or leasing of real or
personal property between the fund and a
disqualified person;
• Lending of money or other extensions of
credit between the fund and a disqualified
person;
• Furnishing of goods, services, or facilities
between the fund and a disqualified person;
• Payment of compensation (or payment or
reimbursement of expenses) by the fund to
a disqualified person; and
• Transfers to, or use by or for the benefit
of, a disqualified person of the income or
assets of the fund.
Exceptions. Acts of self-dealing do not
include:
1. The payment by the fund for the
purposes of satisfying, in whole or in part,
the liability of the electing taxpayer for
decommissioning costs of the nuclear power
plant.
2. The withdrawal of excess
contributions by the electing taxpayer in
accordance with Regulations section
1.468A-5(c)(2).

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3. The withdrawal of amounts that have
been treated as distributions to the electing
taxpayer under Regulations section
1.468A-5(c)(3).
4. The payment of amounts remaining in
the fund to the electing taxpayer after the
termination of the fund upon the substantial
completion of decommissioning.
5. The furnishing of goods, services, or
facilities by a disqualified person to the fund
if the furnishing is without charge and if the
goods, services, or facilities so furnished are
exclusively used for the purposes specified
in section 468A(e)(4).
6. The payment of compensation (and
the payment or reimbursement of expenses)
by the fund to a disqualified person for
personal services that are reasonable and
necessary to carry out the purposes of the
fund and the compensation (or payment or
reimbursement of expenses) is not
excessive.
7. A payment by the fund for the
performance of trust functions and certain
general banking services by a bank or trust
company that is a disqualified person, if the
banking services are reasonable and
necessary to carry out the purposes of the
fund and the compensation paid to the bank
or trust company is not excessive
(considering the fair market interest rate for
the use of the funds by the bank or trust
company).
The allowable general banking services
are:
• Checking accounts, as long as the bank
does not charge interest on any
overwithdrawals;
• Savings accounts, as long as the fund
may withdraw its money after giving no
more than 30 days notice, without losing
interest for the period the money was on
deposit; and
• Safekeeping activities (for example, rental
of a safe deposit box).
Taxable period. For an act of self-dealing,
the term “taxable period” means the period
beginning on the date of the act of
self-dealing and ending on the date of the
earliest of —
• The date of mailing of a notice of
deficiency under section 6212 for the
section 4951 tax,
• The date on which the tax imposed by
section 4951 is assessed, or
• The date correction of the act of
self-dealing is completed.
Amount involved. The term “amount
involved” means the greater of the amount
of money given (or received) and the fair
market value of the other property given (or
received). When services described in
section 4951(d)(2)(C) are involved, the
amount involved is only the excess
compensation.
Note. Fair market value is determined as of
the date on which the act of self-dealing
occurs and at the highest market value
during the taxable period.
Correction and correct. The terms
“correction” and “correct” mean the undoing
of an act of self-dealing, to the extent
possible, but in any case returning the fund
to a financial position no worse than it would
have been if the disqualified person acted
under the highest fiduciary relationship.

Disqualified person. The term “disqualified
person” means a person who is:
1. A contributor to the fund.
2. A trustee of the fund.
3. An owner of more than 10% of (a) the
total combined voting power of a
corporation, (b) the profits interest of a
partnership, or (c) the beneficial interest of a
trust or unincorporated business that is a
contributor to the fund.
4. An officer, director, or employee of a
person who is a contributor to the fund.
5. The spouse, ancestor, or a lineal
descendant, or a spouse of a lineal
descendant of an individual described in (1)
through (4) above.
6. A corporation of which persons
described in (1) through (5) above own more
than 35% of the total combined voting
power.
7. A partnership of which persons
described in (1) through (5) above own more
than 35% of the profits interests.
8. A trust or estate of which persons
described in (1) through (5) above own more
than 35% of the beneficial interest.
For purposes of (3a) and (6) above,
indirect stockholders would be taken into
account under section 267(c), except that,
for purposes of this paragraph, section
267(c)(4) will be treated as providing that
the members of the family of an individual
are only those individuals described in (5)
above. For purposes of (3a), (3c), (7), and
(8) above, the ownership of profits or
beneficial interests will be determined by the
rules of constructive ownership of stock
provided in section 267(c) (other than
paragraph (3) thereof), except that section
267(c)(4) will be treated as providing that
the members of the family of an individual
are only those individuals described in (5)
above.

Dispositions of an Interest in a
Nuclear Power Plant
There are federal income tax consequences
when there is a transfer of assets of a
nuclear decommissioning fund in connection
with the sale, exchange, or other disposition
of a transferor of all or a portion of its
qualifying interest in a nuclear power plant
to another taxpayer (transferee). If the
requirements of Regulations section
1.468A-6(b) are met, the federal income tax
consequences are the following:
1. No gain or loss. If there is a
disposition of an interest (wholly or partially)
in a nuclear power plant, neither the
transferor or the transferee (or either’s fund)
will recognize gain, loss, or otherwise take
any income or deduction into account
because of the transfer of all or some of the
assets of the transferor’s fund. Also, the
transfer is not considered a payment or
contribution of assets by the transferor’s
fund (or by the transferee to its fund).
2. Basis. Transfers of assets of a fund
to which Regulations section 1.468A-6
applies do not affect basis. The transferee’s
fund will have a basis in the assets received
from the transferor equal to the transferor’s
basis in those assets immediately prior to
the transfer.
3. Tax year of disposition.
A. Transferee. If a transferee does not
file a request for a schedule of ruling

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amounts by the deemed payment deadline
(21/2 months after the end of the tax year of
the disposition), the transferee’s ruling
amount for the interest acquired is
determined by taking the amount contained
in the transferor’s current schedule of ruling
amounts for that tax year and that plant
multiplied by the product of:
(1) The portion of the transferor’s
qualifying interest that is transferred, and
(2) A fraction, the numerator of which is
the number of days in the tax year of the
transferor including and following the date of
the disposition, and the denominator of
which is the number of days in that tax year.
B.Transferor. If a transferor does not file
a request for a revised schedule of ruling
amounts on or before the deemed payment
deadline for the tax year of the transferor in
which the disposition of its interest in the
nuclear power plant occurred (that is, the
date that is 21/2 months after the close of
that tax year), the transferor’s ruling amount
with respect to that plant for that year will
equal the sum of:
(1) The ruling amount contained in the
transferor’s current schedule of ruling
amounts with respect to that plant for that
tax year multiplied by the portion of
qualifying interest that is retained, if any,
and
(2) The ruling amount contained in the
transferor’s current schedule of ruling
amounts with respect to that plant for that
tax year multiplied by the product of:
(a) The portion of the transferor’s
qualifying interest that is disposed of and
(b) A fraction, the numerator of which is
the number of days in the tax year that
precede the date of the disposition, and the
denominator of which is the number of days
in that tax year.
4. Tax year after the year of
disposition. A transferee of, or a transferor
who retains, a qualifying interest in a nuclear
power plant, must file a request for a revised
schedule of ruling amounts for the interest
by the deemed payment deadline (defined
above). If the transferee (or the transferor)
does not timely file such a request, the
transferee’s (or the transferor’s) ruling
amounts for the interest for that tax year will
be zero.
For more information, see Regulations
section 1.468A-6.
Privacy Act and Paperwork Reduction
Act Notices. We ask for the information on
this form to carry out the Internal Revenue
laws of the United States. You are required
to give us the information. We need it to
ensure that you are complying with these
laws and to allow us to figure and collect the
right amount of tax.
Section 4951 of the Internal Revenue
Code requires disqualified taxpayers
engaged in self-dealing with a trust to pay
over to the IRS an initial tax. This form is
used to report the initial amount of tax that
you owe. Sections 6001 and 6011 require
you to provide the requested information if
the tax applies to you. Section 6109 and its
regulations require you to provide your
social security number or other identifying
number. Routine uses of this information
include disclosing it to the Department of

Page 5 of 5

Instructions for Form 1120-ND

12:35 - 8-MAR-2007

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Justice for civil and criminal litigation and to
other federal agencies, as provided by law.
We may disclose the information to cities,
states, the District of Columbia, and U.S.
Commonwealths or possessions to
administer their tax laws. We may disclose
the information to foreign governments
pursuant to tax treaties. We may disclose
the information to contractors for tax
administration purposes. We may also
disclose this information to federal and state
agencies to enforce federal nontax criminal
laws and to combat terrorism. If you do not
provide this information, or you provide false
or fraudulent information, you may be
subject to interest, penalties, and/or criminal
prosecution.
You are not required to provide the
information requested on a form that is

subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long
as their contents may become material in
the administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required by
section 6103.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated average time
is:
Recordkeeping . . . . . . . . . . . . 23 hr., 26 min.
Learning about the law or the
form . . . . . . . . . . . . . . . . . . .

-5-

3 hr., 7 min.

Preparing the form . . . . . . . . .

5 hr., 30 min.

Copying, assembling, and
sending the form to the IRS . . .

32 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. You can
write to the Internal Revenue Service, Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave., NW, IR-6406, Washington, DC 20224.
Do not send the tax form to this address.
Instead, see Where To File, on page 1.